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Mortgages

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Mortgage and loan repayment arrears rise

High interest rates and cost of living have pushed mortgage arrears to a near four year high.

Thursday, February 1st 2024, 11:00AM

The latest data from credit bureau Centrix shows the proportion of home loans in arrears rose in December, with 1.4% or 20,800 mortgages now past due, up from 1.29% in October.

This is an increase of 21% year-on-year, with many loans due to roll onto higher interest rates in the next three to six months. The last time mortgage arrears were higher was March 2020 when they hit 1.49% percentage. However, they remain historically low.

Centrix managing director Keith McLaughlin says the time of the year also has some effect. “Arrears typically spike around the holiday season. That said, it is still challenging for homeowners.”

He told the AM breakfast programme the arrears reflect what’s happened to interest rates and cost of living increases over the past 12 to 18 months.

"The sad thing is really, it's affecting one proportion of the population disproportionately to the other. So, those who took out very high mortgages at very low-interest rates to buy expensive houses… are the ones that have now been caught by the increase in interest rates.

“That’s affecting their monthly budgets and they are the ones struggling, whereas households that have paid down or paid off their mortgages may have money on deposit and will not be feeling the effect anywhere to near the same extent.”

Until recently, home loan arrears had been steadily declining since May, when they were at 1.32%, hovering between 1.25-1.26% over July to September.

Mortgage stress is expected to increase further, with 55% of existing mortgages (by value) still to be repriced to current mortgage rates in the next 12 months.

Talk of the OCR and interest rates dropping this year were put to bed this week by RBNZ’s chief economist Paul Conway who said domestic inflation was still too high and the central bank was in no hurry to alter its direction of keeping rates higher for longer to get inflation back to its target band of 1-3%.

McLaughlin says until there is interest rates or cost of living relief, households under pressure will struggle.

Meanwhile across all loans nearly half a million Kiwis are behind on payments. In December consumer arrears rose to 12.1% or 439,000 people behind on payments. This is 6.1% higher year-on-year and 4,000 higher than a month ago.

McLaughlin says this sends a worrying signal to the market.

Tags: mortgages

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.45 7.05 6.85
ANZ 8.64 7.99 7.49 7.35
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.39 6.89 6.75
ASB Bank 8.64 7.39 6.89 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.35 6.89 6.79
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.95 7.65 7.45
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.15 - -
Co-operative Bank - Owner Occ 8.40 7.35 6.89 6.75
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.85 7.39 7.25
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.85 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.59 7.29
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.35 7.89 7.65
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.35 6.89 6.75
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.90 7.39 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.30 7.89 7.69
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.30 8.89 8.69
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.95 7.45 7.29
SBS Bank Special - 7.45 6.95 6.79
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 7.05 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.19 7.55 7.55
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.39 6.75 6.75
Unity 8.64 6.99 6.85 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 7.15 6.85 -
Westpac 8.64 7.89 7.49 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.89 6.65
Median 8.64 7.45 7.37 6.79

Last updated: 14 February 2024 1:37pm

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